Private sector activity growth in the Yorkshire & Humber region accelerated slightly in March, although remained weaker than the long-run series trend and the UK average. Contributing to this was a further easing in new business growth, which was the slowest in three months. As a result, firms cut back on their staff levels for the first time since May 2013. On the price front, input prices declined, while charges rose marginally.
The headline Lloyds Bank Yorkshire & Humber Business Activity Index – a seasonally adjusted index that measures the combined output of the region’s manufacturing and service sectors – posted 52.3 in March, up slightly from 51.9 in February and indicating a moderate expansion in output in the region. However, the latest figure was much lower than the average seen over the current 41-month period of growth (56.1) and below the UK average.
New orders at Yorkshire & Humber private sector companies increased at the slowest rate since December 2015. Moreover, the rate of expansion was weaker than seen across the UK as a whole. According to panellists, challenging economic conditions, the loss of major clients and a reluctance among clients to commit to new projects all contributed to the softer rise in new business.
For the first time in nearly three years, private sector firms cut back on their workforce numbers in March. Efficiency improvements and redundancies were cited as some of the reasons behind the fall in staff numbers. This contrasted with the UK as a whole, where payroll numbers increased for the thirty-ninth month in a row.
Resulting from subdued new order growth, volumes of unfinished work were depleted. However, the rate of decline was only marginal overall.
Input prices decreased on average in March. According to sector data, the decline in purchasing costs was mainly centred on the manufacturing sector, where reports of lower commodity prices helped to ease cost pressures. Meanwhile, prices charged increased, albeit at only a slight rate.
Commenting on the Lloyds Bank Yorkshire & Humber PMI survey, Leigh Taylor, area director for SME Banking in the North East and Yorkshire, Lloyds Bank Commercial Banking, said: “The Yorkshire & Humber private sector economy improved at the end of the first quarter, with business activity growth picking up marginally from February’s three-year low.
“However, the rate of increase was slower than seen across the UK as a whole and firms cut back on their staffing levels for the first time in nearly three years amid weaker new business growth. Meanwhile, businesses’ costs declined further and selling prices rose for the second month running, pointing to an improvement in margins.”